Correlation Between Nasdaq and Terregra Asia

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Terregra Asia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nasdaq and Terregra Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Terregra Asia Energy, you can compare the effects of market volatilities on Nasdaq and Terregra Asia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nasdaq with a short position of Terregra Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Terregra Asia.

Diversification Opportunities for Nasdaq and Terregra Asia

-0.17

Correlation Coefficient

Nasdaq  Terregra Asia

Good diversification

The 3 months correlation between Nasdaq and Terregra is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy and Nasdaq is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nasdaq Inc are associated (or correlated) with Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Nasdaq i.e., Nasdaq and Terregra Asia go up and down completely randomly.

Pair Corralation between Nasdaq and Terregra Asia

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Terregra Asia. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 5.58 times less risky than Terregra Asia. The stock trades about -0.05 of its potential returns per unit of risk. The Terregra Asia Energy is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  1,900  in Terregra Asia Energy on October 22, 2024 and sell it today you would earn a total of  2,700  from holding Terregra Asia Energy or generate 142.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Nasdaq Inc  vs.  Terregra Asia Energy

Nasdaq Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Terregra Asia Energy

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Terregra Asia Energy are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Terregra Asia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Terregra Asia

The main advantage of trading using opposite Nasdaq and Terregra Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Terregra Asia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Terregra Asia will offset losses from the drop in Terregra Asia's long position.

The idea behind Nasdaq Inc and Terregra Asia Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.